www.forbes.com Reuters, 01.31.03, 1:44 AM ET By Tanya Pang

SINGAPORE, Jan 31 (Reuters) - Oil prices held steady on Friday, treading water after gains of 1.5 percent this week, as traders waited to see whether talks later in the day between U.S. and British leaders would bring war with Iraq one step closer.

U.S. light crude dipped one cent to $33.84 a barrel, less than $1.50 below a 26-month peak of $35.20 struck on January 21, and bringing gains this week to more than 50 cents.

Low global oil stocks and limited spare production capacity to counter the severe reduction in strike-bound Venezuelan oil exports, and the potential disruption to Iraqi oil sales, have taken crude prices up more than 30 percent since late November.

Analysts see little relief for the time being to high oil costs, which are beginning to percolate into the broader global economy.

"The current environment suggests to us that a potential war with Iraq carries significant upward price risks, even from current levels, in the event of any supply hiccup that develops outside the likely interruption to Iraq's exports," said Merrill Lynch in a weekly outlook.

Iraq is eighth in world crude exporter rankings, selling up to two million barrels per day to the international market.

British Prime Minister Tony Blair arrived in Washington late on Thursday for talks at Camp David with U.S. President George W. Bush on the next step in the showdown with Iraq, which Bush says has broken U.N. resolutions by stockpiling banned weapons.

Bush said on Thursday that he would give diplomacy "weeks not months". U.S. Secretary of State Colin Powell is due to present evidence on Wednesday to the U.N. Security Council to show that Baghdad is pursuing programmes to build biological, chemical or even nuclear weapons.

Washington and its staunchest ally, London, are massing a huge military force in the Gulf, and Bush has vowed to disarm President Saddam Hussein, with or without United Nations backing.

VENEZUELA TALKS CONTINUE Talks were set to continue in Venezuela on Friday to try to find a resolution to the eight-week strike, which has slashed oil sales from the world's fifth-biggest exporter and strangled a vital supply line into the United States, where fuel inventories are hovering close to historic lows.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal gathered in Caracas on Thursday to bolster talks between President Hugo Chavez and his opponents.

Ali Rodriguez, president of state oil firm Petroleos de Venezuela, said on Thursday crude production should be back to about 2.8 million barrels per day (bpd) by the end of February, but a strike official at the company said it was doubtful.

Ciro Izarra, PDVSA's former head of trading, who was fired for going on strike, said the company was unlikely to be able to meet contractual deliveries for the rest of 2003 due to problems with output, refining and management.

Authorities have fired more than 5,000 PDVSA managers and technicians to try and break the strike, which began on December 2 and is aimed at forcing the resignation of Chavez.

Izarra said he expected Venezuela to export an average 1.7 million bpd this year, one million bpd below pre-strike levels, if Chavez continued to operate the industry without the majority of its skilled workers and managers.

OPEC chief Abdullah al-Attiyah said on Thursday that the producers' group had done all it could to control world oil.

The Organisation of the Petroleum Exporting Countries is due to lift its official output ceiling by 1.5 million bpd on February 1 to counter the fall in Venezuela's exports.

"OPEC has no magic wand to solve the political problems and stop the rise in price," Attiyah, who is also Qatari oil minister, told Reuters.

www.faz.com By Doug Bandow

Chancellor Gerhard Schröder says Germany “will not take part in a military intervention in Iraq,“ although it is less clear whether his government will oppose war when the UN Security Council votes. France also offers resolute ambiguity, threatening, but not promising, a veto.

Yet Washington remains skeptical that its critics are serious, and U.S. Secretary of State Colin Powell has indicated that he expects Paris to give in - as it always does. It is noted that Schröder won reelection by running against the Bush administration's plan for war in Iraq but later promised to send German troops to Turkey to crew AWACS planes sent by NATO. Even the refusal of NATO to approve America's request for assistance is seen as only temporary.

Over the years, Washington has learned that it can browbeat most any nation into submission on most any issue, but the coming showdown over Iraq offers Europe another chance. Simple criticism, however, whether from angry demonstrators or frustrated diplomats, will not dissuade President George Bush from ordering an attack on Iraq. Concrete practical steps are necessary.

First, France must do more than bluster. Only by vetoing any UN war resolution can France hope to stop the Bush administration's war plans. And only by making a commitment and sticking to it will Paris be able to encourage China and Russia to join it. A veto by two or three of the Security Council's permanent members, supported by the negative votes of Germany and perhaps other states, would demonstrate a sobering lack of international support.

Second, Schröder must prove that opposition to Washington is more than a cheap election stunt. The U.S. doesn't need Berlin's approval if it nevertheless allows unfettered American use of German airspace, permits Washington to shift forces from bases in Germany, and even mans AWACS planes supporting the war. If the chancellor believes Washington's Iraq policy to be misguided, even dangerous, he must say so - and vote against any Security Council resolution, bar the use of German troops in any fashion, and deny Washington use of German airspace and bases.

Third, France and Germany must encourage other governments to join them. A protest by several European states carries more weight than criticism by one or two. An opposition that included Pakistan and Syria - like Germany, temporary members of the Security Council - as well as India, Indonesia, and perhaps Japan would be more impressive still.

Fourth, Berlin and Paris should encourage Jordan, Saudi Arabia, and Turkey, where a new government faces a public that opposes war by a nine-to-one margin, to stand firm against any war. Fifth, Britain's Labour Party must say no to war in its name. Prime Minister Tony Blair is supporting Bush administration policies, but this will not be Tony Blair's war.

Sixth, other U.S. allies must look after their own interests. Australia, for example, has strongly backed the Bush administration, yet war against Iraq would create additional Muslim grievances and encourage the use and transfer of whatever weapons of mass destruction Baghdad possesses, increasing the likelihood of an even more devastating, Bali-like attack.

South Korea and Japan are understandably focused on the prospect of North Korea restarting its nuclear program, but war in Iraq makes war in Korea more likely. Although Bush has proclaimed his intentions on the Korean Peninsula, no one should take him at his word. Once the conquest of Iraq is complete there will be rising demands inside the administration for military action against the North, and at that point opposition by Seoul and Tokyo may be too little, too late.

Lastly, other governments must warn Washington that they will not bail it out after any war.

The Bush administration is counting on European nations to furnish many of the tens of thousands of troops who will be needed for years to preserve some pretense of order among Baathists, Kurds, Shiites, and returning émigrés. Berlin, Paris, and others should tell Washington that it will be not only a U.S. war, but a U.S. peace.

If Berlin and Paris back down after publicly avowing their opposition to war in such strong terms, they will reinforce the justifiable contempt in which they are held in Washington. And U.S. administrations will continue to ignore them in foreign crises.

The credibility of European and other critics of Washington is at stake. Giving in will feed Washington's conviction that it can impose its will without constraint. The Iraq process will inevitably be repeated, only with Iran or North Korea as the next target. Or with a plan for coercive “regime change“ in Saudi Arabia or Venezuela.  Or perhaps one to forcibly disarm Pakistan.

It will be difficult to stop Washington's rush to war. United foreign opposition offers the only hope of doing so.

Doug Bandow is a Senior Fellow at the Cato Institute in Washington. and a former Special Assistant to President Ronald Reagan.

This article first appeared in the Frankfurter Allgemeine Zeitung. Jan. 31

www.islam-online.net

“We import only 1.4 million tones of crude oil from Iraq, and in the event of a war only these supplies will be affected,” Naik said

By IOL South Asia Correspondent

NEW DELHI, January 30 (IslamOnline) — U.S. President George Bush’s latest State of the Union address, delivered Wednesday, January 29, convinced India that a U.S. attack on Iraq is imminent despite worldwide opposition which prompted New Delhi to prepare contingency plans to cope with fuel shortfalls in the event of such a war.

The concern in India is understandable because 68 percent of its oil supplies comes from the Gulf region.

Of the 78.64 million tones of crude oil imported in the last financial year, 53.43 million tones came from this region.

Kuwait, which supplied 12 million tones of oil to India between 2001 and 2002 is reported to have assured India of safe oil delivery by flying U.S. flags on its oil tankers.

The ministry of petroleum, based on its experience of the 1991 Gulf War, has prepared two scenarios of oil supplies disruption.

In the first scenario, which considers the fallout from a war limited to Iraq only, supplies of crude oil to India may not get disrupted too seriously.

However, the second scenario sees the conflict spreading to the larger Gulf region and seriously disrupting imports.

In the second case, the superpowers and the entire world community are expected to move swiftly to secure the flow of supplies.

To prepare for the second scenario, Indian refineries have been asked to explore alternative crude oil imports, including spot purchases from regions outside the Gulf.

It also involves buying crude oil from Egypt, Yemen, Nigeria, Malaysia, Norway, Venezuela, Oman and Australia until the crisis is over.

Indian public sector undertakings (PSUs) and private firms will be asked to maximize crude and gas output.

India also may resort to imports and float 15 days of oil inventory by hiring super tankers.

Oil Minister Ram Naik assured the country that oil companies have stored over 40 days petroleum products supplies and 15 days of crude oil supplies to meet contingencies arising out of the war.

Besides, imports from Iraq constitute a small part of the total import of oil.

“We import only 1.4 million tones of crude oil from Iraq, and in the event of a war only these supplies will be affected,” Naik said Tuesday, January 28.

During the 1991 Gulf War, Saudi Arabia and Iran jacked up oil production to meet shortfalls.

Earlier this week Iranian President Mohammad Khatami assured India that Iran would increase oil supply to India in case of war and subsequent shortfall in supplies.

Prime Minister Atal Behari Vajpayee on Tuesday asked Bush to exercise "maximum restraint".

Knowing that the U.S. president may not be amenable to Vajpayee’s advice, Foreign Minister Yashwant Sinha told Indian envoys to the Gulf region to assure the sizeable Indian community that in the event of war India would safeguard their interests.

Sinha had a meeting in Abu Dhabi Tuesday with the Indian ambassadors in Iraq, Saudi Arabia, Kuwait, Jordan, Syria, Turkey, Bahrain, Qatar and UAE to discuss the latest developments.

Sinha called the meeting on his way to Tajikistan and Kyrghyzstan in Central Asia.

The foreign minister is reported to have discussed plans to evacuate Indian nationals in case of an emergency.

Indian Opposition Stand Against War Indian activists demonstrate against possible war against Iraq

Meanwhile, Sonia Gandhi, leader of opposition in the Indian parliament and president of the Congress Party which rules most of Indian states, said Thursday, January 30, that "all peace-loving nations should get together to prevent any attack on Iraq."

Addressing Congress workers on the death anniversary of Mahatma Gandhi at Congress headquarters in Delhi, Sonia Gandhi said "any unilateral military action against Iraq should be condemned by all peace-loving nations."

"There should be no military action against Iraq as the war will not remain confined to one area and its aftershocks will be felt the world over.

"All the peace-loving nation should get united and condemn any attack on it. It would be a great service to humanity," she stressed. The Congress Party president said that the present Iraq issue should be resolved through peaceful dialogue under the ambit of the United Nations.

"India has been a peace-loving nation and has always believed in the supremacy of the United Nation.

"We look forward to this world body for resolution of this crisis and hope this problem is solved through peaceful means," she said.

europe.cnn.com Thursday, January 30, 2003 Posted: 1120 GMT

LONDON, England -- Oil prices dipped slightly on Thursday as the U.S. upped the diplomatic pressure on Iraqi leader Saddam Hussein to reveal any weapons of mass destruction.

However, a large drop in U.S. winter heating fuel stocks deepened oil supply worries.

Brent crude futures for March delivery were down 11 cents to $30.91 in London morning trading on Thursday.

The possibility of war in the Gulf region -- which supplies 40 percent of world crude oil exports -- and a strike that has cut exports from Venezuela have pushed up prices 35 percent since late November.

U.S. President George W. Bush continued to lobby for support in a war against Iraq. On February 5, Secretary of State Colin Powell will seek to build support for war. (Full story)

German Chancellor Gerhard Schroeder, one of the European leaders most strongly opposed to war on Iraq, said on Wednesday he was unsure whether diplomacy would succeed in averting war.

Meanwhile, Britain led a group of eight European countries calling for unity in forcing Saddam to disarm. (Full story)

The combined European stance prompted analysts to say the market expected further oil price gains.

"The comments from European countries saying that Saddam has a short period of time in which to act leads me to believe that they will shift towards supporting the use of force in the next week or so," Sydney-based independent energy analyst Simon Games-Thomas told Reuters.

Wednesday's price gains came as the U.S. government reported that a two-week freeze across the eastern part of the country cut more than three million barrels, or eight percent, from heating oil stocks last week.

"Though it would be easy to focus on the near-$1 rally in crude prices, the real story for the day was the disproportionate strength in heating oil and gasoline prices," Michael Rothman, energy analyst at Merrill Lynch, told Reuters.

Supplies are now 16 percent below normal levels. Home heating oil prices are at 23-month highs, up 25 percent from last year, boosting concern over the economic impact of higher energy costs.

The U.S. has taken about two-thirds of all Iraq's U.N.-controlled oil exports in January as key supplier Venezuela struggles through a strike aimed at removing President Hugo Chavez from office. (Full story)

Venezuela, which normally supplies more than 13 percent of U.S. oil imports, said on Wednesday it had managed to raise strike-hit oil production to 1.4 million barrels a day, while striking oil workers put the output level at just above one million barrels.

www.heraldtribune.com By MAR ROMAN Associated Press Writer

President Fidel Castro said Wednesday that the U.S. government faces widespread disapproval from the American public and risks harming the world economy if it launches a military attack on Iraq. "The vast majority of the world's public opinion opposes this already announced war," Castro told a packed audience of foreign visitors at Havana's convention center in a nighttime speech broadcast live on state-controlled television. "The threat of a war in Iraq has been looming considerably over the world economy, which is currently affected by a serious and deep crisis," said Castro. The Cuban president said Venezuela's current political turmoil had already affected world oil prices, pushing them to intolerable levels, especially for poor nations. "It's a general opinion that the aim of the war against Iraq is to take possession of the world's third oil reserve, which worries Europe as it imports 80 percent of the energy. On the contrary, the United States imports between 20 and 50 percent," Castro said. Castro, wearing an elegant black suit and tie, spoke at the end of an international academic conference dedicated to independence hero Jose Marti on the 150th anniversary of his birth. The Cuban leader was responding to U.S President George W. Bush's State of the Union speech Tuesday night, in which he pledged to use the "full force and might of the U.S. military" if needed to disarm Iraq. Castro said recent surveys show that 65 percent of Americans oppose a military attack on Iraq without approval of the United Nations Security Council. Bush's statements are especially dangerous, said Castro, because "they are not pronounced by a mad man from a dark corner in a mental hospital," but a leader with access to nuclear weapons. Among those in the audience were former French first lady Danielle Mitterand and ex-Mexican President Miguel de la Madrid. The well-known Cubans there included Elian Gonzalez, the boy at the center of an international custody battle three years ago, and Aleida Guevara, daughter of the late revolutionary Ernesto "Che" Guevara. As he wound up his prepared speech, Castro looked at his watch and expressed surprise that he had spoken for less than an hour. Castro's speeches can run more than two or three hours.

Last modified: January 29. 2003 10:36PM

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